What signal is Tesco giving by withdrawing ‘double the difference’?

April 29, 2011
(by Morten Hviid) Tesco has yet again rewritten its price guarantee.  In late February 2011, it announced a ‘double the difference’ guarantee , but by early April high take-up led it to cap at £20 the amount it would pay out. Now (end-April) they have further reduced the guarantee to simple price matching.  Price guarantees have many purposes, most of which are anti-competitive (see my summary of the academic literature).   There is, however, one theory known as signalling which can be pro-competitive.  This argues that a motive for firms to adopt a price guarantee is to signal to consumers that they have low prices.   What does Tesco’s action today suggest about this signalling theory? Read the rest of this entry »

Who Should Copy Whom in the Design of Merger Control?

April 15, 2011

(by Bruce Lyons) The UK regime for controlling potentially anticompetitive mergers has a number of idiosyncrasies as compared with most other competition authorities across the globe.  For example:  the two phases of merger inquiries are carried out by separate institutions; merger notification is voluntary;  very small mergers can be caught by the ‘share of supply’ test for jurisdiction; and minority shareholdings can be prohibited on the grounds of ‘material influence’.  Some of these are good idiosyncrasies, and other jurisdictions could learn from the UK, but other idiosyncrasies are a handicap, and the UK system would benefit from reform.  Which fall into each of these two categories? Read the rest of this entry »

Should Competition Law Apply to Markets where No Firm Dominates and there are No Illegal Agreements?

April 9, 2011

(by Bruce Lyons) The UK competition regime has a powerful weapon that is available to almost no other country.  It can investigate markets that appear not to be working competitively despite the lack of a dominant firm, then choose to impose remedies ranging from structural divestments to legally binding behavioural commitments.  Other regimes, including the European Commission, can choose to investigate markets, but none can impose such powerful remedies (except Israel, which recently replicated the UK model).  The UK government regards this as one of the key strengths of its competition regime.  Is it?  And would it benefit from major reform? Read the rest of this entry »

The UK Cartel Offence: Finding an Alternative to Dishonesty

April 7, 2011

(by Andreas Stephan) The UK has had a criminal cartel offence since 2004.  Since then, it has prosecuted just two cases.  One was the result of a plea bargain in the USA.  The other collapsed in chaos.  The criminal offence is in crisis.  The government’s consultation document on the UK competition regime recognises the need for reform , pointing to problems associated with the requisite test of dishonesty, such as those highlighted by a 2007 CCP public survey.  The four options suggested by the Government would each make it easier for the prosecutor to argue a case.  However, none would result in a wave of criminal prosecutions or avoid difficulties related to efficiency defences for cartel-like behaviour. Read the rest of this entry »

Would a Prosecutorial Approach Strengthen the UK’s Antitrust Regime?

April 6, 2011

(by Andreas Stephan) The UK prosecutes far fewer antitrust cases (i.e. illegal agreements and abuse of dominance) than any other significant jurisdiction.  These few cases also take a very long time to complete.  As part of its consultation on changes to the competition regime, the UK government suggests that changes are necessary in order to improve the efficiency of enforcement.  In particular, it asks whether we should streamline the current inquisitorial procedure or replace it with a more prosecutorial approach. Read the rest of this entry »